What happens in Greece will not stay there. Photo: Getty Images
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What happens in Greece will not stay there. The Prime Minister must act

Rachel Reeves surveys the scene ahead of the UK's budget and explains why she's backing Andy Burnham for Labour leader.

In the aftermath of the Greek referendum, the threat of instability in the Eurozone reminds us that Britain cannot insulate itself from global economic forces. So we need this week’s Budget to help build a more resilient economy – securing our public finances, productivity and competitiveness.

Tony Blair and Gordon Brown rightly kept us out of the single currency that was supposed to deliver stability - but is currently creating the opposite. Yet we would be naïve to think that disruption on our doorstep will not have consequences at home. In Europe and at the IMF the British Prime Minister and Chancellor should be arguing for a new deal for Greece, including proper restructuring of the Greek economy but also more time and greater debt write-downs. Without this, more austerity is simply going to deliver higher unemployment, lower output, and deeper deficits.

But uncertainty abroad also underscores the importance of securing our position at home.

Before the 2007 global financial crisis hit, Britain’s national debt was less than 40 per cent of GDP. Today it is more than 80 per cent. It will be the work of this, and future, parliaments to get it back to sustainable pre-crisis levels. This is not only so we can withstand external shocks, it is also essential for ending a situation where annual debt interest payments are set to exceed £50bn a year – more taxpayers’ money going to bondholders every year than we pay to the teachers in our schools or the nurses in our hospitals. We must deal with our debt precisely so we can release resources for the public services we believe in and the infrastructure our economy needs.

Labour is committed to this task. But we will need to be clearer than we were at the last election about a timetable for getting the deficit down and set a target for when we would get the national debt back to pre-crisis levels. The approach Labour committed to before the election could have seen debt still above 65 per cent in 2030. We must admit the mistakes of the past, and be clear that while spending on public services did not cause the financial crisis, the deficit that we were running when the shock hit meant we weren't as prepared as we should have been. Andy Burnham understands this, and this is exactly why I am backing him for Leader of the Labour Party. Looking forward, we should commit to run a surplus when the economy is growing at or above its historic average rate, allowing us to bring the debt down more quickly. And the Office for Budget Responsibility should be the independent arbiter of the government’s progress in this.

Getting our debt down as a share of GDP means cutting departmental spending as well as driving efficiency across all our public services. But crucially, it also means building a more productive and inclusive economy, raising earnings and reducing reliance on benefits and tax credits.

Early in the last Parliament, George Osborne promised to “rebalance the economy” with a “march of the makers”. But since then we have seen productivity stagnate, our current account deficit rise to record levels, and a fragile recovery that remains too reliant on household borrowing and which has yet to be felt in many parts of the country.

The underlying weaknesses and imbalances in our economy pose no less a risk to our future stability and prosperity than the unsustainable state of our public finances. We need a Budget that rises to both challenges.

Take social security spending, Labour supports the principle of a benefit cap to ensure our welfare system is fair, affordable and rewards hard work. But to make significant savings from social security we need a Budget to create more productive, high skilled, better paid jobs. Without this, cutting away support for low-paid workers, as this government plans, risks weakening work incentives and deepening the division and disadvantage that prevent us making the most of our country’s potential.

Now is not the time to be timid, now is the time to be bold and so on Wednesday, the Chancellor should announce an increase in the minimum wage. And with five million people paid less than living wage, there should be tax breaks for firms who will pay the living wage, better use of government procurement and a requirement on companies to report on whether they pay the living wage so consumers can vote with their purses and wallets.

And crucially, this week's budget needs to back the entrepreneurs and employers who create jobs – rewarding innovation and investment, improving access to finance, and doing what it takes to secure the research base, skilled workforce and world class infrastructure businesses need.

With a focus on economic credibility, constructive engagement with business and a bold plan for technical education and skills, Andy has shown that he gets this - and the need for Labour to lead the debate over Britain’s economic future.

That’s why I am pleased to be co-chairing Andy's Business Panel which launched last week alongside Graham Cole, chair of Augusta Westland, and Shabir Randeree, Chair of DCD group. This week the panel met for the first time to start the conversation in which we will work to engage businesses of all shapes and sizes throughout the country – so that Labour can best understand what businesses need to create the jobs and opportunities to grow our economy.

Dealing decisively with the deficit and the debt are essential to good economic management, but so is a strategy to raise the productivity of our workforce and the competitiveness of our businesses. If this week’s budget does not rise to this twin challenge, we in the Labour Party must show that we can.

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Donald Trump ushers in a new era of kakistocracy: government by the worst people

Trump will lead the whitest, most male cabinet in memory – a bizarre melange of the unqualified and the unhinged.

“What fills me with doubt and dismay is the degradation of the moral tone,” wrote the American poet James Russell Lowell in 1876, in a letter to his fellow poet Joel Benton. “Is it or is it not a result of democracy? Is ours a ‘government of the people by the people for the people’, or a kakistocracy rather, for the benefit of knaves at the cost of fools?”

Is there a better, more apt description of the incoming Trump administration than “kakistocracy”, which translates from the Greek literally as government by the worst people? The new US president, as Barack Obama remarked on the campaign trail, is “uniquely unqualified” to be commander-in-chief. There is no historical analogy for a President Trump. He combines in a single person some of the worst qualities of some of the worst US presidents: the Donald makes Nixon look honest, Clinton look chaste, Bush look smart.

Trump began his tenure as president-elect in November by agreeing to pay out $25m to settle fraud claims brought against the now defunct Trump University by dozens of former students; he began the new year being deposed as part of his lawsuit against a celebrity chef. On 10 January, the Federal Election Commission sent the Trump campaign a 250-page letter outlining a series of potentially illegal campaign contributions. A day later, the head of the non-partisan US Office of Government Ethics slammed Trump’s plan to step back from running his businesses as “meaningless from a conflict-of-interest perspective”.

It cannot be repeated often enough: none of this is normal. There is no precedent for such behaviour, and while kakistocracy may be a term unfamiliar to most of us, this is what it looks like. Forget 1876: be prepared for four years of epic misgovernance and brazen corruption. Despite claiming in his convention speech, “I alone can fix it,” the former reality TV star won’t be governing on his own. He will be in charge of the richest, whitest, most male cabinet in living memory; a bizarre melange of the unqualified and the unhinged.

There has been much discussion about the lack of experience of many of Trump’s appointees (think of the incoming secretary of state, Rex Tillerson, who has no background in diplomacy or foreign affairs) and their alleged bigotry (the Alabama senator Jeff Sessions, denied a role as a federal judge in the 1980s following claims of racial discrimination, is on course to be confirmed as attorney general). Yet what should equally worry the average American is that Trump has picked people who, in the words of the historian Meg Jacobs, “are downright hostile to the mission of the agency they are appointed to run”. With their new Republican president’s blessing, they want to roll back support for the poorest, most vulnerable members of society and don’t give a damn how much damage they do in the process.

Take Scott Pruitt, the Oklahoma attorney general selected to head the Environmental Protection Agency (EPA). Pruitt describes himself on his LinkedIn page as “a leading advocate against the EPA’s activist agenda” and has claimed that the debate over climate change is “far from settled”.

The former neurosurgeon Ben Carson is Trump’s pick for housing and urban development, a department with a $49bn budget that helps low-income families own homes and pay the rent. Carson has no background in housing policy, is an anti-welfare ideologue and ruled himself out of a cabinet job shortly after the election. “Dr Carson feels he has no government experience,” his spokesman said at the time. “He’s never run a federal agency. The last thing he would want to do was take a position that could cripple the presidency.”

The fast-food mogul Andrew Puzder, who was tapped to run the department of labour, doesn’t like . . . well . . . labour. He prefers robots, telling Business Insider in March 2016: “They’re always polite . . . They never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case.”

The billionaire Republican donor Betsy DeVos, nominated to run the department of education, did not attend state school and neither did any of her four children. She has never been a teacher, has no background in education and is a champion of school vouchers and privatisation. To quote the education historian Diane Ravitch: “If confirmed, DeVos will be the first education secretary who is actively hostile to public education.”

The former Texas governor Rick Perry, nominated for the role of energy secretary by Trump, promised to abolish the department that he has been asked to run while trying to secure his party’s presidential nomination in 2011. Compare and contrast Perry, who has an undergraduate degree in animal science but failed a chemistry course in college, with his two predecessors under President Obama: Dr Ernest Moniz, the former head of MIT’s physics department, and Dr Steven Chu, a Nobel Prize-winning physicist from Berkeley. In many ways, Perry, who spent the latter half of 2016 as a contestant on Dancing with the Stars, is the ultimate kakistocratic appointment.

“Do Trump’s cabinet picks want to run the government – or dismantle it?” asked a headline in the Chicago Tribune in December. That’s one rather polite way of putting it. Another would be to note, as the Online Etymology Dictionary does, that kakistocracy comes from kakistos, the Greek word for “worst”, which is a superlative of kakos, or “bad”, which “is related to the general Indo-European word for ‘defecate’”.

Mehdi Hasan has rejoined the New Statesman as a contributing editor and will write a fortnightly column on US politics

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era